18 Oct 07 Div 7A: "present legal obligation" and distributable surplus - TD 2007/28This final Taxation Determination was issued on 17 October 2007. It was previously released in draft form as TD 2007/D8: see 2007 TAXVINE No 20 (12) (25 May 2007). Its full title is "Income tax: what is a 'present legal obligation' of a private company for the purposes of s 109Y(2) of Division 7A of Part III of ITAA 1936?" The Determination states:
"A 'present legal obligation' of a private company for the purposes of s 109Y(2) of Division 7A of Part III of ITAA 1936 is an immediate obligation binding at law, whether payable and enforceable presently or at a future time. Future provisions and contingencies are not included in the distributable surplus calculation under s 109Y unless they are one of the accounting provisions specifically set out in, or prescribed under, paragraph (b) of the definition of 'net assets' in s 109Y(2)."
For a copy of TD 2007/28, go here